Do R&D Subsidies Stimulate or Displace Private R&D? Evidence from Israel
Year: 2002
Type: article
Abstract: In evaluating the effect of an R&D subsidy we need to know what the subsidized firm would have spent on R&D had it not received the subsidy. Using data on Israeli manufacturing firms in the 1990s we find evidence suggesting that the R&D subsidies granted by the Ministry of Industry and Trade greatly stimulated company financed R&D expenditures for small firms but had a negative effect on the R&D of large firms, although not statistically significant. One subsidized New Israeli Shekel (NIS) induces 11 additional NIS of own R&D for the small firms. However, because most subsidies go to the large firms a subsidy of one NIS generates, on average, a statistically insignificant 0.23 additional NIS of company financed R&D.
Source: Journal of Industrial Economics
Author: Saul Lach
Institution: Hebrew University of Jerusalem
Language: English
Topic: Innovation Policy and R&D
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3123462346